Simplified limited liability company (SARL-S)

Last update 23.07.2019

The simplified limited liability company (Société à responsabilité limitée simplifiée – SARL-S) is a form of commercial company that is subject to rules that are somewhat different to those that apply to a conventional private limited liability company (Société à responsabilité limitée – SARL).

One of the main features of the SARL-S is that, for entrepreneurs, it reduces the burden of some of the requirements for forming an SARL. For example, the minimum share capital required to form an SARL-S is EUR 1, and the company can be formed by private deed, without the need for a notary.

The SARL-S provides first-time entrepreneurs with a vehicle that allows them to commence trading immediately.

Who is concerned

SARL-Ss can only be formed by natural persons.

A natural person may not be a shareholder in more than one SARL-S at the same time, unless shares were transferred to them following the death of another shareholder.

On the other hand, a natural person may be a shareholder in an SARL-S and another company having a different legal form. For example, they may be a shareholder in an SARL-S and a conventional SARL, or an SA (public limited company), at the same time.

As is the case for conventional SARLs, an SARL-S can have between 1 and 100 shareholders.

Prerequisites

Simplified limited liability companies can only be formed by craftsmen, traders, manufacturers and certain liberal professionals, and the purpose of the company must be specified in its deed of incorporation.

Anyone who wishes to form an SARL-S must first apply for a business permit from the Ministry of the Economy. The permit will be required to register the company with the Trade and Companies Register (Registre de commerce et des sociétés – RCS).

Costs

Setting up an SARL-S entails certain costs, including:

  • the cost of publication in the Trade and Companies Register (RCS);
  • a share capital contribution of at least EUR 1;
  • any costs related to the issuance of administrative authorisations.

How to proceed

Deed of incorporation

An SARL-S may be formed by private deed. A notarised document is not required.            

Company name

The SARL-S must have a company name that is established in its deed of incorporation.

The name must be different from that of any other existing company.

To find out whether the company name is available, contact the RCS.

The company name, followed by the wording "SARL-S", must appear on all legal company documents.

Duration

An SARL-S may be established for a limited duration or an unlimited duration.

Conversion

If the number of shareholders exceeds 100, the SARL-S has one year to change its legal form.

It will also be required to change its legal form if the share capital exceeds EUR 12,000.

The decision to change the legal form of the company is taken at a meeting of shareholders.

Dissolution

An SARL-S may be dissolved for the following reasons:

  • expiry of the company's duration;
  • completion or extinction of its business purpose;
  • judicial ruling to dissolve the company for legitimate reasons;
  • voluntary dissolution decided on by the single shareholder or all shareholders at the meeting of shareholders.

Unless specified otherwise in its articles of association, an SARL-S is not automatically dissolved in the event of the death, disqualification, bankruptcy or insolvency of one of the shareholders.

Any document establishing the voluntary dissolution of the company must be accompanied by the following administrative certificates:

Capital

The share capital of an SARL-S must be at least EUR 1 and no more than EUR 12,000. It must be fully subscribed and paid up when the company is formed.

The contributions of the company's shareholders must be in cash or in kind.

Form of company shares

The shares in an SARL-S are registered shares.

Neither shares in the company's capital nor profit shares may be issued to the public.

Shares in the company's capital and profit shares may not be negotiable securities; they may only be registered share certificates – i.e. issued to registered shareholders.

Private bond issues are allowed, but the shareholders' approval is required in the case of convertible bonds.

Transfer of company shares

The company shares are not freely negotiable.

Shares with voting rights may not be transferred inter vivos to anyone other than shareholders or holders of profit shares with voting rights without the approval of the general meeting of shareholders representing at least 75 % of the share capital. However, if provided for in the articles of association, the proportion of the share capital required for approval may be lower (but not less than 50 %).

Share transfers must be recorded in a private deed or a notarised deed.

Structure of managerial bodies

An SARL-S is managed by one or more managerswho may or may not be shareholders – appointed by the shareholders, either in the articles of association or in a subsequent deed, for a limited or unlimited term. The shareholders' assembly represents the company's capital and takes all decisions regarding the latter.

The manager

The management of the company is entrusted to one or more natural persons – who may or may not be shareholders – appointed by the shareholders, either in the articles of association or at a subsequent general meeting of shareholders, for a limited or unlimited term.

With the exception of actions requiring a decision on the part of the shareholders, as provided for by law or in the articles of association, the manager(s) may undertake any action they deem necessary or useful for achieving the corporate purpose.

The day-to-day management of the company, as well the representation of the company in managerial matters, can be delegated to one or more managers, directors or other representatives – who may or may not be shareholders – acting alone or jointly.

The company is bound by the actions of the managers, even if these actions surpass the company purpose.

Meeting of shareholders

Important: In an SARL-S, the shareholder must always be natural persons. An SARL-S may never have a company as a shareholder.

A natural person may only be a shareholder in one SARL-S at the same time, unless shares in another SARL-S were transferred to them further to a death.

The shareholders' decisions are taken at general meetings of shareholders. The general meeting of shareholders decides on the following:

  • amendments to the articles of association;
  • changes in the company name;
  • changes in the share capital;
  • changes in the legal form of the company;
  • the appointment or dismissal of managers;
  • the liquidation of the company, or changes in its nationality.

The shareholders are entitled to a share of the profits.

The shareholders are entitled to information on the inventory, balance sheets and reports produced by the supervisory board, if such a board exists.

Management reports produced by the SARL-S must be approved by the shareholders at a meeting of shareholders.

In SARL-Ss with more than 60 shareholders, a general meeting of shareholders must be held at least once a year. The time of year at which the meeting is held is specified in the company's articles of association.

Other meetings of shareholders are convened by the manager(s).

The supervisory board, if it exists, or shareholders with more than 50 % of the share capital. There are no legal requirements governing how and when meetings of shareholders should be convened. These details are usually set forth in the articles of association. Meetings of shareholders can also be conducted in writing or by video conference if the number of shareholders does not exceed 60.

All shareholders are entitled to take part in the decision-making process.

Shareholders may enter into agreements amongst themselves regarding the exercise of voting rights.

Each shareholder has a number of votes equal to the number of shares they hold. Decisions are validly taken by majority vote representing 50 % of the capital.

In SARL-Ss with a single shareholder, the latter alone wields the powers vested in the general meeting of shareholders.

Liability

The founders of the company and, in the event of an increase in capital, the managers, are jointly liable in respect of third parties for:

  • any part of the capital that is not validly subscribed, and for the difference between the minimum capital and the subscribed capital;
  • the full payment of the shares and the portion of the capital for which they have subscribed;
  • remedying any damages arising from:
    •  the company's nullity; or
    • omissions or inaccurate statements in the company's deed of incorporation.

However, the deed of incorporation of the SARL-S may restrict the label of "founder" to subscribers who, together, hold at least one third of the share capital. In that case, all other shareholders mentioned in the deed of incorporation will be deemed simple subscribers.

The shareholders are liable to the extent of the amount of their contribution to the share capital.

The company is bound by the actions undertaken by the manager(s), even when they surpass the corporate purpose, unless it can be proven that the third party involved knew, or could not have been unaware of, the fact that the action surpassed the corporate purpose.

However, when several managers are appointed, the company may define their joint and/or individual duties and powers, in which case the latter must be declared to the Electronic Compendium of Companies and Associations (Recueil électronique des sociétés et associations – RESA) for publication and then become enforceable against third parties.

Managers are accountable to the company for carrying out the duties entrusted to them, and for any misdeeds committed in the performance of such duties.

Obligations

Auditor oversight

SARL-Ss with more than 60 shareholders are subject to compulsory oversight by one or more internal auditors named in the articles of association. The auditors may or may not be shareholders.

Any company which, on the balance sheet closing date after 2 consecutive years of operation, exceeds the thresholds specified in 2 of the 3 criteria mentioned below, is legally required to have their accounts audited by a statutory auditor:

  • balance sheet total: EUR 4.4 million;
  • net turnover: EUR 8.8 million;
  • average number of full-time employees: 50.

Legal publications

An SARL-S must apply for registration with the RCS.

The formality of registering the company with the RCS requires the disclosure of the following information about the company:

  • the company or trade name and, where applicable, any abbreviations or commercial sign used;
  • the legal form of the company and, where applicable, any additional details required by law;
  • the exact address of the company's head office;
  • the purpose of the company;
  • the amount of the share capital.

Additionally, the SARL-S must disclose:

  • the identities of its shareholders, their private or professional addresses and the number of shares they hold;
  • its business permit number.

All subsequent changes must be filed with the RCS for publication in the RESA.

All of the company's legal documents must bear:

  • the company name;
  • the wording, "société à responsabilité limitée simplifiée";
  • the address of its head office;
  • the Luxembourg Trade and Companies Register registration number;
  • the capacity of the signatory of the legal document.

   There is no requirement to mention the share capital.

The company's financial statements must be filed with the Luxembourg Register of Trade and Companies (RCS) within 7 months of the closing of the financial year (6 months to hold the general meeting of shareholders, plus 1 month from the date of the meeting).

Accounting

An SARL-S must produce:

  • a balance sheet;
  • a profit and loss statement, along with its annexes;
  • a management report, which must be approved by the general meeting of shareholders.

An SARL-S may produce a short-form balance sheet if, on the balance sheet closing date, it has not exceeded the thresholds in 2 of the following 3 criteria:

  • balance sheet total: EUR 4.4 million;
  • net turnover: EUR 8.8 million;
  • average number of full-time employees: 50.

An SARL-S may group certain items together in the profit and loss statement if, on the balance sheet closing date, it has not exceeded the thresholds in 2 of the following 3 criteria:

  • balance sheet total: EUR 20 million;
  • net turnover: EUR 40 million;
  • average number of full-time employees: 250.

Taxation

SARL-Ss are subject to the following fees and taxes:

  • a fixed registration fee;
  • property tax;
  • business tax;
  • net wealth tax;
  • corporate income tax;
  • VAT, based on the following criteria:
    • if its annual turnover excluding taxes is less than EUR 112,000: VAT returns must be filed annually;
    • if its annual turnover excluding taxes is between EUR 112,000 and EUR 620,000: VAT returns must be filed quarterly;
    • if its annual turnover excluding taxes exceeds EUR 620,000: VAT returns must be filed monthly.

Forms / Online services

Declaration of honour regarding contributions in capital

To complete your application, the information about you collected from this form needs to be processed by the public administration concerned.

That information is kept by the administration in question for as long as it is required to achieve the purpose of the processing operation(s).

Your data will be shared with other public administrations that are necessary for the processing of your application. For details on which departments will have access to the data on this form, please contact the public administration you are filing your application with.

Under the terms of Regulation (EU) 2016/679 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, you have the right to access, rectify or, where applicable, remove any information relating to you. You are also entitled to withdraw your consent at any time.

Additionally, unless the processing of your personal data is compulsory, you may, with legitimate reasons, oppose the processing of such data.

If you wish to exercise these rights and/or obtain a record of the information held about you, please contact the administration in question using the contact details provided on the form. You are also entitled to file a claim with the National Commission for Data Protection (Commission nationale pour la protection des données), headquartered at 1, Avenue du Rock'n'Roll, L-4361 Esch-sur-Alzette.

By submitting your application, you agree that your personal data may be processed as part of the application process.

Déclaration sur l'honneur relative à l'apport en capital

Les informations qui vous concernent recueillies sur ce formulaire font l’objet d’un traitement par l’administration concernée afin de mener à bien votre demande.

Ces informations sont conservées pour la durée nécessaire par l’administration à la réalisation de la finalité du traitement

Les destinataires de vos données sont les administrations compétentes dans le cadre du traitement de votre demande. Veuillez-vous adresser à l’administration concernée par votre demande pour connaître les destinataires des données figurant sur ce formulaire. Conformément au règlement (UE) 2016/679 relatif à la protection des personnes physiques à l'égard du traitement des données à caractère personnel et à la libre circulation de ces données, vous bénéficiez d’un droit d’accès, de rectification et le cas échéant d’effacement des informations vous concernant. Vous disposez également du droit de retirer votre consentement à tout moment.

En outre et excepté le cas où le traitement de vos données présente un caractère obligatoire, vous pouvez, pour des motifs légitimes, vous y opposer.

Si vous souhaitez exercer ces droits et/ou obtenir communication de vos informations, veuillez-vous adresser à l’administration concernée suivant les coordonnées indiquées dans le formulaire. Vous avez également la possibilité d’introduire une réclamation auprès de la Commission nationale pour la protection des données ayant son siège à 1 Avenue du Rock'n'Roll, L-4361 Esch-sur-Alzette.

En poursuivant votre démarche, vous acceptez que vos données personnelles soient traitées dans le cadre de votre demande.

Who to contact

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